Category: Politics and Society

City Schools

In Tel Aviv, people may move to the suburbs for a variety of reasons – the impossibility of finding parking in the city and the high housing prices are two popular complaints – but not school quality. There are great public schools right in the city, including some non- or barely selective schools; the metro area-wide magnet classes for gifted children are located in the city and in some of its inner suburbs.

As one might expect, Tel Aviv is a high-income city: on a list of municipalities in Israel ranked by income, Tel Aviv is rated 8 out of 10 (higher is richer), where the only places rating 9 and 10 are a few exclusive gated communities and a single major suburb, Ramat HaSharon. Tel Aviv’s richer suburbs, to its north, are rated 8 as well; there is nothing to gain income-wise from moving, except perhaps that Tel Aviv is more diverse and has both super-rich areas and poorer areas while the suburbs are uniformly upper middle-class. As far as I can tell, it has always been the case – like France, Israel has a long history of housing the poor in the outskirts rather than in the inner city; this is not a recent case of gentrification.

Against this light, what Aaron Renn is writing about city schools is unsurprising. As American cities are getting relatively richer due to gentrification, their quality of public services, including schools, is improving, due to both more money and middle-class civic tradition. This process is incomplete and slow: because American cities’ recent history is of ghettoized squalor rather than gated opulence, many city schools are substandard and suffer from neglect, underfunding, and corruption, and this itself is a turnoff for prospective urban residents.

In effect, the areas that are already rich attract the rich and middle class; this should not surprise anyone. Corruption can be bought away with enough money, and underfunding is not an issue. New York’s suburbs lead the nation in school funding, which requires property taxes, and as a result, the six counties with the highest property taxes in the US are New York City suburbs; ironically, one of the reasons people move back to New York, which according to the ACS data is outgrowing the rest of its metro area, is that its property taxes are lower.

Urban activist Jonathan Kozol even wrote a book blaming discrepancies in school funding on inner-city school underperformance. His statistics, as of the early 2000s, showed about $11,000 per student in funding in New York, and $22,000 in its richest suburbs. Since then, Bloomberg has hiked school funding to nearly $18,000 per student, while the suburbs have not increased much, going up to $24,000 in Great Neck and $26,000 in Manhasset, two districts cited by Kozol for high spending.

Services are always good for the rich. In homogeneous high-income communities, there is no need for private security, private schools, and other excesses typical of the wealthy in poor areas. Instead, high housing prices act as a replacement for gates – and, incidentally restrictive zoning forcing housing prices up is a major component. Thus, public services are of high quality, even in areas that love nothing more than to yell at urban liberals for wasting money on schools.

Although the upper and middle classes are often still afraid to stay in the city with children past age six, this is declining. While the Israeli middle class can skip on the low-income suburbs and instead move to high-income ones, the American middle class can’t move into a city without dealing with poor people. When they do, it creates friction, as always happens when people suddenly have to deal with those who are different – for example, in New York, it involves separate schools, some good and some not, located in the same building.

The defining question for urban consensus governance is how to make sure the friction ends up resolving itself well, with good public services extending to regions that are not rich. Merely requiring integration of services does not solve much; the problem is more systemic. In Hawaii, the state’s status as a single school district led to school underperformance, and, as such conservative writers on urban issues as Michael Lewyn point out, school integration in American cities led the white middle class to escape to segregated suburbs and private schools, which offered a gated education experience. Clearly, changing governance boundaries without social change does not solve social problems much.

Development-Oriented Transit

Occasionally, people faced with very high transit construction costs propose value capture, where some of the increase in land value coming from transit access is directed to the transit agency. Yonah Freemark has just brought up this issue again, in the context of Toronto’s failure to find private investors willing to put money for its extravagant suburban subways in exchange for greater land value.

Despite the list of examples of value capture used to fund transit, the idea remains a poor one. Jarrett Walker gives a list of consequences of value capture, one good (it ties transit success to density) and two bad (it is bad at serving existing density, and at social justice).

In New York, Second Avenue Subway and the 7 Extension are both very expensive, but the 7 Extension is getting funded by value capture whereas to construct Second Avenue Subway, backroom deals by Assembly Speaker Sheldon Silver were required. If anything, Jarrett’s first bad consequence is understated: politicians prioritize projects they can find private support for, especially reformists, and ignore transit lines that merely have very high ridership potential. At worst, it encourages collusion with developers and therefore corruption.

Jarrett misses one additional problem: nobody expects developers who build near highways to contribute to highway construction costs, and until they do, to tax developments near transit is to give developers an incentive to build near highways. Transit agencies should either reform themselves to become profitable or seek a reliable source of tax subsidy, but they should not tax people who do the right thing and build compact, transit-oriented development.

There’s a common misconception that in Japan and Hong Kong, both famous for the integration of rail construction and development, development is used to subsidize transit. Reality is the other way around: in most cases, Japanese private railroads use development to raise transit ridership, and although the real estate dealings are often higher-margin, the rail transportation is profitable by itself without exception. The Hong Kong MTR, too, is profitable on transportation alone, but keeps engaging in development to raise profit margins and provide patronage for the trains.

Many cities do in fact follow the model of Hong Kong and the private railroads of Japan, but entirely in the public sector. They upzone around transit stations, reduce or eliminate parking minimums, and restrain or avoid expanding auto capacity. This was done intensively in Calgary and Vancouver, which in recent years have been North America’s leaders in both efficient transit construction and transit modal share increase.

Note that this is still to a large extent development-oriented transit, and still creates problems with politicians who overfocus on greenfield TOD, but not to the same extent as value capture. Vancouver is seriously planning a rapid transit line to UBC, the main neglected urban line, just later than it should have. In contrast, New York is sidelining future phases of Second Avenue Sagas entirely; even PlaNYC only incorporates the first two of four phases, which are too far advanced to ignore.

Toronto could not follow the positive example of Vancouver and Calgary; there was too much NIMBYism along the routes proposed. This same problem also plagued the proposal for land value capture. The problem is that Toronto’s bad government is so suburban-focused it really believes in building transit to low-density suburban regions, and at the same time in enhancing auto accessibility (Mayor Rob Ford demagogued about a war on cars in his campaign).

In this sense, land value capture, and in general development-oriented transit, should be viewed as a failure of consensus for good transit, regardless of whether this consensus allows transit to be profitable or to be stably subsidized. At its best, for example in the Vancouver suburbs, development-oriented transit is a political price to be paid for suburban support for high-ridership urban lines. More commonly, as frequently happens with value capture, it sidelines the high-ridership lines completely. And at its worst, as is happening with the 7 extension, it’s a transfer of wealth from the public to private developers in the hopes of future tax revenues.

On Privatization

My post identifying the FRA as American passenger rail’s biggest nemesis drew a lot of links due to the relevance to Rep. Mica’s proposal to privatize the Northeast Corridor. So it is time to step back and ask in general which problems privatization could solve, and which problems are facing American rail travel apart from the FRA. The operating assumption here is that capitalism is not a magical thing that always works, but rather a system that solves some problems created by competing economic systems while creating others.

First, privatization can be done in two separate ways. In Japan, or in the US before 1971, railroads comprise both infrastructure and operations. They run their own trains on their own tracks, and negotiate bilateral trackage rights agreements when they need to access other companies’ tracks. They compete for passengers, but cooperate when necessary; for example, many Shinkansen trains run through the territory of both JR Central and JR West, but the change of drivers only takes a minute.

The other way to privatize, favored in Europe and by Mica, is to split track ownership and operations, on the model of airports (not owned by airlines) and highways (not owned by truckers). Tracks remain public, operations are contracted out to the highest bidder. Regional services in Europe require subsidies, so the highest bidder in this context is the one asking for the smallest subsidy. Depending on which country it is and whether the service is regional or intercity, the public entity controlling the track may fix the schedules and fares in order to guarantee seamless compatibility between different operators.

Both ways have subcategories – for example, in the first method, the government could provide zero subsidies (Hong Kong), minor subsidies for capital construction (Shinkansen construction in Japan, the electrification of the Northeast Corridor south of New York in the 1930s), or ongoing subsidies for operations (Metra, some US commuter lines until the 1970s or 80s). In the second method, the operators can be all private as in Britain, or they could be a mixture of private and state-owned as in France and Germany.

The competition in Japan and the US works, when the railroads have power. There is not much cooperation apart from bilateral agreements and trackage rights. Thus, while Tokyo’s Suica and PASMO are top-notch smartcard implementations, they are poor examples of fare integration; people can swipe the same card on any company’s lines, but transferring from one company to the other requires paying for a separate ticket. For travel between two different metropolitan areas’ companies, smartcards are compatible only based on bilateral agreements, even though all smartcards in Japan use the same FeliCa technology.

When the railroads are not in power, disaster can happen. This is not easily seen in Japan, where the largest cities have not undergone urban renewal or transit decline, but in the US, agency turf means competing for a shrinking customer base and making the customer experience worse.

Therefore, straight Japanese-style privatization requires modifications to ensure timetable and fare integration, and compatible rolling stock. Here, ironically, FRA regulations provided something positive, paving the way to make the Bombardier Bilevel Car a standard commuter rail coach, which different North American cities can lease from one another when necessary; this indicates that what is necessary is better regulations modeled after those of the UIC or Japan rather than a free-for-all.

The other issue with privatization is that one of its primary features, the pruning of marginal branch lines, can become a bug. Focusing on core products has led railroads to neglect markets perceived as marginal rather than try to improve them. Both France and Germany have neglected regional travel in order to look more profitable; although SNCF and DB are state-owned, they act like private companies. In Berlin the resulting deferred maintenance led to a total meltdown, in which three-quarters of the S-Bahn stock had to be recalled on a day’s notice; while German trains are for the most part all compatible, the Berlin S-Bahn is an exception because it was electrified earlier and uses a different voltage from the rest of Germany.

Even in Japan, this is visible once one notes that for JR East and West, the core products are both the Shinkansen and the Tokyo and Osaka commuter networks. All the rest on those networks is lumped together under “Other lines,” so that JR East’s reports do not distinguish the Sendai and Niigata commuter lines from legacy intercity lines. It’s perhaps telling that the fastest non-Shinkansen train in Japan is in Hokkaido, where tilting DMUs on curvy single track with a top speed of 130 km/h average 100 km/h between Sapporo and Hakodate.

Note that the regulations here are mostly irrelevant, except where they involve cooperation between different private companies. Bad regulations can exist both under a private system (e.g. the US before 1971) and under a public one (e.g. the US today); the same is true of good regulations.

We should now step back and look at what enabled the success of the breakup of Japan National Railways, and the subsequent sale of its three constituents serving Honshu to private investors. Restructuring slashed the labor force, improved the quality of management, shut down lightly used lines, and erased the debt that JNR has accumulated to cover operating losses (for it was not subsidized, unlike Western money-losing railroads). It was done slowly, and the government helped find jobs for the displaced workers, which was easy since at the time Japan’s economy was booming. Subsequently, safety and punctuality increased.

The problems privatization solved, then, include operational inefficiency, political meddling forcing the operation of marginal lines, and labor problems. JNR not only was overstaffed, but also was represented by four separate unions, split along political rather than professional lines, ranging from centrist to communist. In the years before privatization, this was mitigated by reforms to both management and labor.

The experience of the positives of JNR privatization further shows that instead of shock therapy or PPPs, a slow reforming approach is required. The best practice is to do this slowly, like in Japan, and postpone the final decision until substantial changes have been made. A government that is too incompetent to run things by itself is also too incompetent to ensure privatization works for the public rather than just for cronies; at least some increase in the quality of government is required if privatization has any hope of success.

Reform vs. Reformism

Urban politics in what’s now the US Rust Belt has been dominated by the same battle between the machine and the reformists since the machines first came into existence in the 19th century. Since the national partisan battles weren’t too applicable, especially after the cities became dominant-party Democratic, the battle lines cemented based on this reform vs. machine issue, creating the same intense partisanship as at the national level.

I encourage everyone to read the Historic American Engineering Record‘s first two articles about the New York City Subway, by Wallace Katz and Clifton Hood. The importance is that the same battles are being fought today, with the same social ideas behind each group. The people Katz calls the patrician reformers still try to fix social problems with engineering and design, only they’re disaffected with cars and suburbs rather than cities.

The ultimate symbol of machine politics in New York is Sheldon Silver; the ultimate symbol of reformism is Michael Bloomberg. The former bloc has gotten almost as much beating as it deserves from Streetsblog, Cap’n Transit, and other congestion pricing supporters. But the reformists must be equally examined, because although they want transit to be better, they want it better their way and this is not the same as transit advocacy.

The reformists’ idea of reform is framed in partisan opposition to the machine; bipartisanship in the national sense of liberal vs. conservative is just part of the plank. They’re not wedded to competence, which is a different animal. Being seen as doing something is more important than success. That’s why Jay Walder uses the high costs of the MTA as an excuse to go through with another failed smartcard scheme. Reformists have a lot of valuable outside knowledge to bring to the table – for example, proof-of-payment on buses and commuter rail – but so far the administration hasn’t really done any.

The opposite of outsider knowledge is insider knowledge, and reformists that ignore it will not succeed. The Swiss and the Japanese grew expertise from the inside, and learned from outsiders where needed. When overstaffed, they lost workers to slow attrition, rather than mass layoffs whose size is determined by labor lawyers and which are not targeted at the most redundant workers. Of course, the only people with insider knowledge are the union members who’d be let go – but this underscores the need for consensus, not heavyweights.

Another reformist problem is the unwillingness to invest in the lower class, except for paternalistic redevelopment schemes. This was true in the urban renewal era and is still true today. JSK’s bike lanes and pedestrian plazas, almost the only good import of the city’s reformist class, are a sop to gentrification. The opposition of community boards is part of the mythology of fighting for the greater good, leading to the same predictable authoritarianism as that of Robert Moses. In reality, when East Harlem practically begged the city for bike lanes, JSK ignored it.

Bloomberg impresses people who don’t know which good reforms he’s squandered because they don’t fit his preconceptions. A friend of a friend wrote a computer program that would automatically match substitute teachers to principals who needed them, back when Bloomberg’s focus was reforming education. The program would’ve saved the city $20 million in administrative costs. The administration refused to consider it, because it conflicted with the idea of running schools like businesses.

Reform should instead be done right. The first traditions to go should be those that impede the formation of consensus; unfortunately, this requires learning from the political systems of non-English-speaking countries, which means it’s extremely unlikely to happen. Beyond that, learning from outsiders should be done in the tradition of Japanese industrialization and European proliferation of good industry practices rather than in that of American companies bringing heavyweight CEOs to save them. The CEOs and the reformists are both more mobile and more insulated from their mistakes than the shareholders or city residents they affect. Perhaps the first thing American cities need to learn from the outside is what the proper way to learn from the outside is.